Starbucks Acquires Teavana

The world’s largest coffee chain made a logical progression into loose tea with the acquisition of Teavana last month, says Martin Connelly, owner of The Little Red Cup Tea Company.

Teavana’s loose teas span the spectrum from Monkey Picked Oolong ($25 / 2 oz) to Pineapple Kona Pop Herbal Tea ($7.20/ 2 oz). That is, from high-grade traditional teas grown in China, Japan, and India to blended concoctions worthy of our good friend’s young daughter Clara, who, seeing no reason to compromise, was a “kitty cat fairy princess” for Halloween two years ago.

The tea industry as a whole has seen remarkable market growth in the last few years. According to the Tea Association of the USA, the domestic market has grown from $1.84 billion in 1990 to $8.2 billion in 2011. That’s conservative: the Sage group suggests the domestic tea market is three times larger. Whatever your metrics, this is a good time to be in tea. Palates are developing, and good tea is valued enough in the United States to make importing it a worthwhile endeavor. At the same time, blended teas, hardly new to the market, have grown in popularity. They are a canvas for self-expression, an opportunity for western tea purveyors to claim craftsmanship.

With U.S. tea markets opening up so rapidly, Starbucks’ acquisition makes total sense. Teavana has a huge operation built up already, a supply chain, and a distribution network. And they know tea. Starbucks can use what it has learned about global domination, and start serving $4 specialty tea drinks. The company has already proved adept at selling coffee to the Chinese (no longer a “when pigs fly” situation); I have every confidence they will be able to sell astounding amounts of what Teavana has called “nature’s most delicious resource.”

Starbucks already owns Tazo, for what it’s worth, and Connelly thinks the acquisition will ultimately allow small batch tea companies to thrive much in the same way that Starbuck’s coffee efforts opened the door for places like Blue Bottle and Stumptown.

Comments on this entry are closed.